Overview: City of Portland Business License Tax

The City of Portland began requiring a business license in 1854. Over the years, the City of Portland Business License Tax has been required for regulatory and revenue purposes. Today, Portland's Business License Tax is a net income tax on business activity (including rentals) conducted in Portland. It is used as revenue for the General Fund (police, fire, some parks programs, and general government functions). Portland's Business License Tax is not a regulatory permit fee and does not entitle a taxpayer to engage in business activity not otherwise allowed by federal, state and/or local laws.

Who is required to register their business?

Everyone doing business in the City of Portland is required to register their business. Within 60 days of starting a business in the City of Portland, you are required to register (online, or using a PDF form to mail or fax). No payment is due with the registration form.

Note: All businesses must register. Those that qualify for an exemption don't have to pay.

Exemptions: City of Portland Business License Tax

Sole Proprietors filing a federal form 1040 should note "all sources" includes but is not limited to all schedule C's (including that of a spouse, even if located outside the City and/or County), all schedule E income (including incomes earned outside of the City and/or County), and all schedule D income derived from gains from property sales. "All sources" does not include wages.

Insurance agents, agencies and other representatives as such. Note: "Representatives" means persons selling insurance or transacting insurance as a representative or agent of an insurance company. Such persons must be licensed and regulated by the State of Oregon Insurance Division. Please be aware that "domestic" insurance companies are not exempt.

Exempt businesses still must register (online, or using a PDF form to mail or fax) within 60 days of starting a business. Additionally, they must submit a request for exemption (and provide supporting IRS tax pages) on an annual basis following the close of their tax year. Exemption forms are available in business tax forms.

What is the license tax?

The license tax is 2.2% of the net business income. You will need to file an income report (called the Combined Tax Return) each year to calculate your license tax. Apportionment may be allowed for business activity performed outside the City. THE MINIMUM ANNUAL TAX IS $100. Access to the Combined Tax Return and other forms are found in business tax forms.

Overview: Multnomah County Business Income Tax (MCBIT)

Multnomah County changed from requiring a business license to assessing a business income tax in 1976. Over the years, the tax rate has increased from .6% in 1976 to 1.46% in 1992. The rate was reduced to 1.45% in 1993 when the City and County achieved code conformity and joint administration of the two separate programs. The rate is applied to the net business income. Apportionment may be allowed for business activity performed outside the County. BEGINNING WITH THE 2008 TAX YEAR, THERE IS A MINIMUM TAX OF $100.

Revenue generated from the Multnomah County Business Income Tax goes to the County General Fund and is used to finance libraries, law enforcement, community corrections, jails, juvenile justice, bridges, social services, and health services.

Who has to pay MCBIT?

Everyone doing business in Multnomah County. Within 60 days of starting a business in Multnomah County, you should register (online, or using a PDF form to mail or fax). Please note that this is the same form that is required for the City of Portland. If your business operates inside the City of Portland and Multnomah County, you only need to complete one Registration Form.

Exemptions: Multnomah County Business Income Tax

Sole Proprietors filing a federal form 1040 should note "all sources" includes but is not limited to all schedule C's (including that of a spouse, even if located outside the City and/or County), all schedule E income (including incomes earned outside of the City and/or County), and all schedule D income derived from gains from property sales. "All sources" does not include wages.

Insurance agents, agencies and other representatives as such. Note: "Representatives" means persons selling insurance or transacting insurance as a representative or agent of an insurance company. Such persons must be licensed and regulated by the State of Oregon Insurance Division. Please be aware that "domestic" insurance companies are not exempt.

Individuals whose only business activity is ownership of less than 10 residential rental units. No exemption is available if any other business activity occurs (including sale of residential property). Note: An individual is a natural person or a joint taxfiler. Partnerships, corporations and all entities other than individuals may not look to this exemption.

When and how do I pay these two taxes?

Generally, you must file and pay the taxes within three and one-half months following the end of your taxable year (April 15th for calendar year taxpayers). To file for the City of Portland Business License Tax and Multnomah County Business Income Tax, you complete a one-page City/County tax return called the Combined Tax Return. You may request a six-month extension to file your return. This extension should be accompanied by a payment of the estimated tax due. To access the appropriate forms, visit business tax forms.

Annual Filing Process

You will have 3.5 months after the last day of your tax year to file your return, your extension request, or your exemption request. PLEASE NOTE: Businesses that are exempt must file Form AER (Annual Exemption Request) and provide verification.

For example, if your business fiscal year goes from January 1 to December 31, then your tax return, extension request, or exemption request must be filed by April 15th of the following year.

The tax will be determined by the income figures reported on the tax return. If you are exempt and verifying documentation/tax pages have been provided, then no tax is due.

No payment is due at the time of registration. Registration is required within 60 days of the start of business activity.

I received a "Special Audit Department" letter. What does that mean?

Through an Intergovernmental Agreement with the IRS, the City of Portland Revenue Division was approved by the IRS to participate in their data exchange program to receive federal tax information.

If you received one of these letters, it means that you, either as an individual or another business entity, have filed a tax return with the IRS with a City of Portland and/or Multnomah County address showing business income, and the Revenue Division was not able to match that filing with a business account in our database.

All entities doing business within the City of Portland and/or Multnomah County are required to be registered with the Revenue Division and file annual tax returns.